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Views sought on the policy direction for the FSO’s regulatory framework

Consultancy

On Thursday 14 December, Ofgem published a consultation on its policy direction for the regulatory framework for the Future System Operator (FSO). The consultation first details key features of the FSO’s financial regulatory framework, including that the regulator considers the FSO to be a not-for-profit organisation with the government as the FSO’s sole shareholder. Ofgem intends for the FSO to be funded through a ‘fast money’ approach, with no requirement on the FSO to have a credit rating. The financial regulation would be on an actual basis rather than a notional basis, funded through both electricity and gas industry charges. Secondly, the consultation explains Ofgem’s thoughts on regulatory mechanisms used to steer and manage the FSO’s performance. It also details robust reputational incentives such as appropriate platforms for stakeholders to feedback on FSO performance as key for an enduring FSO regulatory model. Responses are requested by 2 February 2024.